BiH: increasing MTPL tariffs gives rise to a schism between NADOS and the Ministry of Communications and Transport of Bosnia and Herzegovina

21 September 2023 — Daniela GHETU
On 16 September, the provisions of NADOS’s Decision on amendments to the Decision on the method of determining the premium tariff and price list for MTPL insurance, entered in into force in the FBiH leading to an increase in the basic premium from 396 KM to 420.55 KM.

At the 18th session held on August 30, 2023, the expert council of NADOS - the Agency for Insurance Supervision of the Federation of Bosnia and Herzegovina adopted the afore mentioned Decision, which was published in " Official Gazette of the Federation of Bosnia and Herzegovina" No. 69/23. The changes brought by the new regulation entered into force on the eighth day from the day of publication. Starting Saturday, 16 September, insurance companies are obliged to issue MTPL policies in accordance with the new prices.

The decision caused a negative reaction from the Ministry of Communications and Transport of Bosnia and Herzegovina. The Ministry argued that the decision was taken without consulting the state level, especially bearing in mind that, in its view, the Ministry of Communications and Transport of BiH regulates part of this area. While the Ministry said that the changes adopted have raised the price by up to 100 KM, NADOS showed that prices have in fact only risen by 6%, at a premium of 300 KM, which is an increase of 18 marks, but not 100 KM. The Agency also argued that the Ministry has certain competences for the vehicle registration process, but it does not have any competences in relation to mandatory auto liability insurance.

The changes in prices adopted by NADOS came after FBiH motor insurers have been asking for an increase in the basic premium price for MTPL policies for some time, arguing that inflation creates significant pressure on insurance companies' claim funds while parameters used to determine MTPL prices remained unchanged since 1998.

An additional argument for changing the price list is the fact that vehicle registration in the Republika Srpska entity went up by 18% in May of this year, so the premiums are only adjusted in this way, wrote commenting on the facts.

One should note that the two main administrative entities of Bosnia and Herzegovina, Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS) have different supervising authorities and are subjected to different legal provisions. AZOBiH - the Insurance Agency for the entire country, has not any regulatory power on the two separate entities.

The Bosnian currency is pegged to Euro: 1 EUR = 1.95583 BAM